1999 (10) TMI 744 - Board - Companies Law

Summary

Issues Involved:
1. Allotment of shares against the cost of second-hand imported equipment.
2. Challenging the allotments made and the stand of the company that petitioner directors had vacated office.
3. Refusal of the company to allot shares towards the value of the imported second-hand equipment.

Summary:

Issue 1: Allotment of shares against the cost of second-hand imported equipment
- The petitioner, a non-resident Indian, alleged acts of oppression and mismanagement in Ruby General Hospital Ltd., including the refusal to allot shares for imported second-hand medical equipment. The RBI initially approved the allotment but later withdrew and restored the approval. The matter is currently before the Calcutta High Court.

Issue 2: Challenging the allotments made and the stand of the company that petitioner directors had vacated office
- The petitioner claimed that the respondent hijacked the company by removing the petitioner directors and allotting shares to the respondent's group, altering the NRI majority shareholding. The petitioner argued that no proper notice was given for board meetings, violating the company's articles and section 81(1)(a) of the Act. The court found that notices were not validly issued, and the petitioners did not vacate their office under section 283(1)(g).

Issue 3: Refusal of the company to allot shares towards the value of the imported second-hand equipment
- The petitioner imported second-hand equipment worth around Rs. 3 crores, expecting shares in return. The company contended that the equipment was second-hand and unusable. The court noted that the equipment was in working condition until March 1996 and that the company's refusal to allot shares lacked probity and fairness.

Conclusion:
- The court declared that the petitioner directors would continue as directors and stipulated that notices for board meetings must be issued to all directors by registered post with 21 days' notice. The shares allotted on 12-3-1996 and 24-7-1996 would not have voting rights until the Calcutta High Court's decision. The petitioners and respondents are allowed to invest more funds in the company, but the funds will be kept as share application money until the High Court's decision. The court emphasized maintaining the status quo and criticized the role of IDBI and its nominee director in the company's management issues. The petition was disposed of with no order as to costs.